In this Issue in Focus, we are examining the latest tools and initiatives in sustainable supply chain management. Here, guest editor Dave Meyer offers his perspective on the state and direction of the field.
“Sustainable sourcing,” "environmentally responsible logistics,” “green supply chain management (GSCM)” — however one terms it, this essential business-management tool and a key leverage point in driving consumer product sustainability has increasingly gained traction over the last decade. Each of these three perspectives suggests that more companies are exploring integration of an environmental and social lens into core operational and financial management — from material sourcing through product design, manufacturing, distribution, delivery and end-of-life management.
Traditionally, organizations that implement sustainability-focused initiatives have focused solely on cost avoidance by assuring compliance, minimizing risk, maintaining health and protecting the environment within their own “four walls.” Studies have proven time and again that implementing sustainable sourcing initiatives along a company’s entire supply chain, both upstream and downstream of the four walls, can:
- raise productivity and contain costs;
- reduce product environmental footprint
- enhance customer and supplier relations;
- support innovation;
- leverage brand trust; and
- enable prosperous growth.
Watershed Moments & Emerging Trends
Since 2010, there have been several watershed moments where environmental and social responsibility issues converged with supply chain sourcing among worldwide manufacturers and retailers. High-profile environmental, health and safety-driven issues in foreign manufacturing facilities, “conflict minerals” in consumer electronics, new regulatory requirements in restricting toxic chemicals in consumer products have all raised consumer and corporate awareness levels to new heights. Central to each of these moments is how suppliers and vendors impact small to large companies' carbon footprints, in addition to other major value chain concerns such as energy use, material and water resource use, and waste management.
Adding to many companies' existing concerns over environmental protection, large products manufacturers have stepped up to address human rights, fair labor and sustainable development in areas in which they operate throughout the world. Each of these companies has embraced the “whole systems” approach that underscores transparency and collaboration in the supply chain. More companies are recognizing that to be a truly sustainable organization, it must reach deep beyond its four walls to its suppliers and customers. Suppliers have discovered that by working together and finding “reciprocal value," they can collaboratively strengthen each other’s performance, better distribute cost of ownership, and drive reputation management and customer loyalty.
In the past several years, new guidelines and standards promoted by organizations such as the Securities and Exchange Commission, International Organization for Standardization (ISO), Electronic Industry Citizenship Coalition, Sustainable Purchasing Leadership Council and others have captured sustainable sourcing and responsible procurement specific to key issues, and are markedly affecting supply chain behaviors. Central to all these standards and guidelines is how important supply networks are in supporting the entire product ‘value chain,' not only from an environmental perspective, but from a social and community-focused perspective.
Creating a New Normal
It’s clear, in the face of a changing and more competitive global business environment, that the most innovative companies are those who consider business operations through a "sustainability lens." New studies seem to be published monthly that present a compelling case for embedded sustainability in business strategy and operations. Even more, those forward-thinking companies who identify and develop value-added transparency and proactive collaboration throughout the supply chain are becoming proven leaders as they set the pace to leverage organizational risk.
Now, as manufacturing ramps up following the Great Recession, companies are recommitting themselves to implementing more resourceful and less wasteful production as a way to leverage cost, optimize performance and enhance savings. Enhancing this effort to lean the product value chain is recognition of upstream suppliers and vendors work practices and possible impacts they may have on manufacturing outputs. Lean efforts have been demonstrated to yield substantial environmental benefits (pollution prevention, waste reduction and reuse opportunities) as well as leverage compliance issues. Many companies are even beginning to explore the overlaps and synergies between quality-based lean and environmentally based ‘green’ initiatives.
And now in 2013, the emergence of collaborative competition (“co-opetition”) among larger manufacturers has created even greater entry points in the market for smaller, intermediate products manufacturers that supply multinational manufacturers. Larger companies are identifying the critical supply chain partners that have the greatest product impact and by creating a “new normal,” are regularly collaborating to address areas related to environmental toxins in products, worker health and safety and the social footprint of their products where they are produced and through the value chain.